Earnings season may have gotten off to a good start with heavyweights like TCS, ITC and RIL all turning in strong numbers, but some of that sheen is wearing off. The latest set of numbers shows many Indian companies aren’t really coping too well with the slowdown. For a clutch of 224 companies (excluding banks and financials), the top line has grown at 14.5% yoy, the slowest pace in several quarters, indicating that demand isn’t really robust and that not all companies possess pricing power. Discretionary spends by consumers are coming off. At Hindustan Unilever, for instance, the top line grew 15% yoy but only a small part of this was driven by volumes, which increased 5% yoy. For the economy, though, what’s more worrying is that businesses like commercial vehicles and cement remain in a trough; net sales at Ashok Leyland fell 18% yoy as both volumes and realisations were hit, while sales volumes at UltraTech Cement were flat.

Moreover, the capital goods space isn’t seeing a meaningful recovery yet—Larsen & Toubro’s 10% yoy rise in revenues suggests it may be losing momentum because the increase in the first half of the year had been a far more sprightly 21% yoy. Smaller firms, too, are struggling—consolidated revenues at Rallis, for instance, were up just 5% yoy with the chemicals business faring poorly. What helped companies, this time around, was some softening in commodity prices—as a share of sales, the cost of raw materials for the sample has risen just 92 basis points yoy, a much smaller increase compared with that in previous quarters. Lower fuel prices, for example, have driven up profits at UltraTech while Asian Paints gained from lower input costs.

What is not helping matters, however, is the absence of regulatory clarity; the ban on mining operations in Goa and Karnataka, for instance, hit Sesa Goa’s bottom line with the miner posting a loss of R170 crore. So, until the government puts proper policies in place, the production of some key resources could continue to be hampered. For some time now, the Street has been looking for signs of a turnaround in the capex cycle; while L&T’s order book grew 14% yoy in the December quarter and the firm’s order backlog is now R1.62 lakh crore, one would like to see how much of this is executed and how fast. Interestingly, about 22% of the inflows during the quarter